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tv   Power Lunch  CNBC  March 29, 2022 2:00pm-3:00pm EDT

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consumption, and how it changes savings. but these would be substantial increases. very little chance all of it happens. there is some chance that some of it happens. >> exactly this is the starting point for where we may end up. robert, as always, thank you robert frank that does it for "the exchange." "power lunch" begins right now welcome, everybody, to "power lunch." i'm tyler mathis kelly will rejoin me in a second this is a busy hour. the ten-year, two-year yield curve, the difference inyields between those two bonds or bills, close to inverting. what that means for the market and your investments that's just one of the topics that we will ask our fed power player about. philadelphia fed president patrick harker is with us exclusively. he warns that inflation is running far too high we'll talk to him about the pace
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of rate hikes and much more, kelly. looking forward to it. thank you, tyler hi, everybody. let's get a quick look here. snapshot with the dow up 180 we were up more than 400 at the highs. talk of ukraine de-escalation lifting stocks today s&p up 36. the nasdaq up 1.5% or 213 points right now. as tyler mentioned, let's check in on the two-year, ten-year yield spread which by our data has gone flat and is still up about 1 basis point. it has inverted before the last couple of downturns. the three-month, the same track record, is steep according to historical records rick santelli is tracking it all in the treasury market rick >> despite tweets and wire services that everybody out there should understand, the cash market doesn't have one price that absolutely is the same for every area that trades bonds, notes, bills. sometimes there's subtle
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differences. all the systems i look at say the low is still a whisker on a intra-day basis above zero, as you see on this chart. do remember, even though we're trading 1 to 1.5 basis points right now, we'redown we flattened a dozen basis points since yesterday this is wild look at a year-to-date this spread was at 77. think about that that means that two years outperformed tens just since the beginning of the year by close to 77 basis points it's staggering. now, if you open the chart up to july 2019, as we've been showing all day, that's the last time the curve inverted but i like this next chart way, way, way back, let's go to christmas 1989 we had some subtle inversions in '89. the biggest inversion in the year 2000. it inverted about 51 basis points subtle inversions in '06 and '07. subtle and full days we inverted in 2019.
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if i consider the idea of forward rates, there's a lot of smart people out there that are looking at the forward markets and saying, ah-ha. recession indicators, no matter how you slice it i'm not disregarding that. i just think that the fed is so far behind some of the forward markets compared to where we're currently trading, where bills are trading, have distortions. ultimately, the markets will catch up to the fed. don't see any recession on the frontier personally. we have job reports tomorrow and friday i harken to say that they're going to probably some show strong job creation. tyler? >> how do you account for, rick, the fact that one of the curves is flat and the other is not what does that disconnect tell you, if anything >> i think the diskelkconnect t me rates were artificially compressed and held down by central banks too long
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when investors realized central banks were not only making a policy error, they were way late, the market started to make the moves on their own i think it was that action so what you have is you have a bear market with rates going up. it's the bull markets with rates going down that usually give you that ten-year response that indicates recession as rates get very low and the curve truly flattens the kind of flattening and inverting we're seeing in a bear market in treasuries just doesn't fit the bill, in my opinion. >> rick santelli, thanks very much for more on what this could mean for your stockhol holdings, lets bring in serrat. how worrisome is the flattening of the yield curve, at least by one of the curvaceous measures >> i mean, it is definitely an indication that we need to look at it pretty closely it's been a very strong indicator over the past. to rick's point, we've had a lot
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of manipulation in the yield curve. the fed globally, central banks have been buying bonds those are rolling off. we have to see that also work. also, you've got a lot of, you know, as yields have gone up, you have foreigners buying our bonds. so i think those two offsets, as we kind of see what's happening with our economic numbers, one has to watch very closely. the other one that, tyler, we haven't really talked about is once it really starts inverting, what will the machines do? what will the a.i. programs do? that could be, eventually, an opportunity, especially if the numbers don't really represent that we are going to a recession. >> given what you just said, as you look out over the remainder of this year, and we're almost a quarter through it, what is your -- how is the stock market likely to react to these phenomena? >> so i think part of it has been discounted already. you've seen multiples come down. you've seen the overall market come down. then you've seen, you know, what
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i call the hyper growth, the growth stocks, they've come down because the discount rate is going up i think this is the perfect storm for value stocks companie future cash flow, are growing margins and balance sheets are in good order, too value is pretty strong here. >> there are some names, in particular, you like, sarat. chevron, we'll talk more about energy prices in a moment. but do you think this is a space that can do well for some time >> i do. i mean, it's had a great run if you look at where it's come from in the past, it hasn't performed well the last three years. a dividend over 3% you have a strong balance sheet. for the year, it is over $31 billion. that covers their debt if you look at where all prices are going to be, i mean, even if they come down, and we saw, you know, what happens between russia and ukraine, oil is going to be between $70 and $90 for a long time. that price, companies like chevron make a lot of money just
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because they're in all the different places, upstream, downstream, drilling, exploration, et cetera. >> two cheers for general electric it's been a long time since anybody on our air has had really kind things to say about dear old ge, our former owner. >> this is a total restructured play larry was the former ceo they've reorganized the board. it's splitting the company up into three pieces. one is aviation, the star. the second one is going to be health care. the other one is energy and renewables each part is worth so much more than the total you're not getting any credit just because of what is going on globally, what is going on macro level. larry has done a great job the goal is to make each three of these companies investment grade. i think you're basically basing yourag analysis on larry's abily to do this and also the company's bottom line. they have really good products he spun off a lot of low-hanging fruit, and now it is execution
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story. the stock is in the low 90s. it's a true value play. >> remind me, are they spinning the health care segment and spinning the power segment eventually >> yea s. end of 2023, health care will be spun early '24, you'll get power and renewables spun off, as well. >> will they be retaining stakes in those companies or -- >> no. >> so what is left of ge then? aviation >> aviation services, aviation as a shareholder, you'll get to decide which you want to own it is really going to be the sum of the parts let's just focus -- you know, gone are the days of jack walsh where we had to be a conglomerate j&j is spinning off their consumer division. companies are seeing investors want to pay for what they really are. >>en thatnks very much, sarat >> thank you. oil prices are under
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pressure once again today. briefly dipping below $100 a barrel following developments on cease-fire talks in ukraine. let's get to kayla tausche for the latest at this hour. kayla? >> reporter: kelly, there is skepticism from the west, even as those russia-ukraine talks have been ongoing. russia today called them constructive a u.s. official telling reporters russia may be shifting gears in its offensive in ukraine, as troops back away from major cities like kyiv. but describing it as a redeployment elsewhere in the country, not a withdrawal. the comments come as russia's negotiators showed more tolerance in negotiations during those talks in istanbul today. reportedly dropping the amorphous demand of de- de-nazification in ukraine, and suggesting vladimir putin would be open to meeting ukraine's president volodymyr zelenskyy if there is a draft peace agreement. ukrainian negotiators outlined their proposals this morning if kyiv were to disarm and become neutral, countries like
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france, turkey, and israel would guarantee its security going into talks, the goals at a minimum were to establish and enforce safe humanitarian corridors. the goals, atd host, was a cease-fire and withdrawal of troops today, president biden is hosting the prime minister of singapore at the white house they called russia's actions in europe a threat to the rules-based order worldwide and possible new sanctions against russia were part of today's discussion the five leaders of the quint countries, the u.s., uk, france, ger germany, and italy, spoke this morning. a uk official saying the western allies agreed not to let down their guard until all the violence in ukraine had ended. tyler and kelly? >> kayla, thank you very much. kayla tausche. optimism about those talks is one of the factors that is sending oil lower today. pairly above $100 a barrel at 1 $104.74 for west texas
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ryan sull brian sullivan in the house for more. >> that is one part of it, but i won't say it is the main part of it certainly, there's a lot more going on with oil. all right. where are we with oil? well, the price of oil briefly below $99 a barrel it is a bargain, tyler fill up now. we'll see if gas prices respond. a lot of that, of course, talking about ukraine, hopefully, potentially, an end to this war. there's a lot more going on. first off, here's the price of oil. the fact we're at $105 bucks a barrel and we're happy about that, 25 bucks off the low, that's kind of a change. here's where we stand. covid lockdowns in china, that's really going to be the main reason we have seen this drop. you have these rolling lockdowns in shanghai. it is the biggest city in china. 25 million people, three times larger than new york city. 50, 5-0, covid cases, and they lock it down you have concern in europe will they go into recession in
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will it be the demand destruction we talked about? that's what the oil bears are going to say but there's plenty of oil bulls still out there. if you had to talk to oil bulls, as we do, of course, here's what they'd say there's a lot of things going on the end of the war does not necessarily mean the end of sanctions, right say the war ends tomorrow. pray it does are we suddenly dropping sanctions on russian oil is the rest of the world going to do that is europe going to act in the way they're acting probably not nobody suggested that. also, russian oil to the u.s., it's still coming. there was a 45-day window in the deals. there are still ships on the sea with russian oil headed to the united states. that is going to end very soon that's 3%, not a lot in this market, 3% can mean a lot. oh, outside of ukraine, a couple of other things, guys. the u.s. offshore lease program, these five-year leases, they haven't been set the next five years. they're in negotiations with the department of energy,
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environmental groups june 30th is the deadline. is it possible there is no new deal on any new offshore leases? that could mean a lot, couple million barrels a day for u.s. drilling by the way, u.s. demand is strong antony blinken, u.s. secretary of state, in morocco today speaking with representatives of the united arab emirates about goading, urging, pleading with them to raise their output, as well so there's a lot of push-pull right now, guys. the war in ukraine is certainly one big thing. don't miss china don't miss this u.s. offshore lease program. oh, and get this, i'll end with this no attention, but in the "ft" this morning, the head of the epa said that raising u.s. oil and gas production is, quote, compatible with the administration's climate goals that may be the first time that we have heard something like that from the federal government, at least the epa the federal government, parts of it, nudging, as well, the u.s.
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industry to add more production. >> green light, you might call it. >> that could be a beginning of the great moderation that a number of people are talking about. particularly in light of the 2022 elections. >> well, it is a weird -- there's a weird push-pull going on right now, guys think about this next week, april 5th or 6th, i believe it is april 5th, they moved it a few times, congress has asked a bunch of oil and gas ceos to come up and basically be grilled on gasoline prices, as well as, no doubt, climate change on one hand, you're kind of getting grilled over here. on the other hand, you're kind of getting nudged by now the epa kind of giving the green light, as you called it, to raise more production if you made any other product and you're hearing it from both sides, basically, like, you need to be shut down, wound down, but you also need now to increase production in the short term because of, you know, war footing or whatever it may be, those mixed signals can make it very difficult doesn't matter what industry you're in, tyler and kelly, to
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34 plan for five and ten years now. you don't know where you'll be or what the rules are going to be. >> you need me or don't need me. you love me or hate me. >> i need you and love you. >> i know that brian, thanks for coming in. good to see you. coming up on "power lunch," retail with sentiment sliding and valuations nearly at recessionary lows, we'll speak to an analyst who says there are names worth owning design the challenges. later, philadelphia fed president patrick harker we'll find out what he has to say about 2 yield curve, the pace of tera hikes and reigning in inflation that's all coming up keep it here new investors can open an account and get $101 to split across the top five stocks in the s&p 500®. you can also unlock short videos, step-by-step guides, and other easy-to-use tools designed for people just getting started. plus, investment professionals are on standby 24/7 if you ever have a question.
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welcome back we have a power call on retail with wells fargo saying sentiment in the sector is as negative as they can remember. we have inflation, the war between russia and ukraine, the lockdowns in china again, all knocking the bold case which many called earlier in the year. the retail etf is down more than 7% over the past year, with valuations flirting with recessionary lows. versusa 16% gain for the s&p 500. joining us now is the analyst behind this report, wells fargo security's ike i didn't realize valuations are that bad what are they these days >> kelly, so, yeah, it's been a rough ride in retail i feel like it fells like ten years ago that we were reopening. there was a big recovery play. the group was up 100%.
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this is late 2020/early '21. since last summer, the group is actually underperformed the market by 30 points. they've seen their multiples cut in half. we're around ten times earnings for the space. that's a 14-year low >> wow. >> we haven't seen that since '08/'09, which is concerning the problem, kelly, right now is numbers have not come down while valuations look compelling, the issue is that people are starting to think that maybe if demand does start to wane, these companies might be over. >> looks like they're trading ten times forward guidings but really it is 20. i'm not saying it is going to fall in half but it's the worst thing you want to hear, because it lends credence to the consumer, the one stalwart in the economy with liquid balance sheets, better than they've been in years, that could crumble. would inflation be the reason? >> well, look, inflation is a problem, for sure.
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i think the biggest problem right now is the inability to forecast demand for certain discretionary categories think about soft lines, apparel and footwear it grows 1% to 2% a year, like clockwork. the since covid hit, it is more like 8% it grew 30% last year. said differently, we've overshot, potentially, soft lines by about 10% if you think about it in different categories within soft lines, sporting goods, jewelry, some of these categories have overshot by 20% or 30% how do you underwrite growth how do you get any comfort, especially with, you know, the potential of the consumers are actually going to slow that's the problem that's why earnings are shaky in the eyes of investors. >> why did they of shoot by so much was it pent-up demand or the
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flood of subsidy capital that's not the right word for it, but public assistance that was flowing into the system or both >> tyler, it's both. you know, we were all hunkered down for a year. we came out of it. people had money there were checks coming all of a sudden, we're out spending money we start to reopen people are going out to dinner, going on dates some of us are starting to travel again it's wallet share. to put it into perspective, soft lines has lost wallet share every year for basically 50 years. last year, we took the most wallet shares since the '60s everyone's closets are full of stuff. if things slow down, it is not a good equation for the growth category. >> there are four you like we deponeon't have time for eac, but tapestry, bath and body works, and signet jewelers
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those are your picks right now ike, thank you very much >> thanks, guys. >> appreciate it. coming up, robin hood looking to extend its reach, allowing more hours of trading the stock is taking off. we have details next. plus, we'll look at apple's shocking 12-day run. "power lchwi brit ckun" lle gh
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j job. welcome back, everybody. robin hood offers additional trading hours in the morning and evening for investors. trading will be available from 7:00 a.m. eastern to 8:00 p.m., in a push to eventually provide 24/7 service it comes as the platform has been experiencing a slowdown in volume from its pandemic highs in fact, rival firms, charles sq schwab and interactive brokers extended trading from 7:00 a.m. to 8:00 p.m. there's the stock performance. charles schwab up 8% robin hood and iab are in the red. now, the cnbc news update. hi, seema. >> hi, kelly at this hour, in a town east of tel-aviv, paramedics say four
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people were killed in a shooting attack police killed a suspected gunman who reportedly was on a motorcycle two days ago, two police officers were shot dead in another town a week ago, four people were stabbed to death in southern israel on the ground, relations between washington and moscow are year a low point over russia's invasion of ukraine roughly 250 miles aboveground, a russian cosmonaut said, in orbit, we are one crew with a warm handshake, the cosmonaut handed over control of the space station to the the american he the russians will return tomorrow to earth. nfl owners approved a rules change that guaranteed a possession to both teams in overtime, but there is a catch it only applies in the postseason tyler, back to you. >> thank you very much, seema. ahead on "power lunch," the
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fed factor we have a big interview with the fed president patrick harker of philadelphia central bank, on target with the rate hike planplan we'll explore that with him. plus, the, working lunch meeting is scheduled with the company trying to make the construction city more efficient. that'd hellop wer costs. "power lunch" will be right back this is the new world of work. each day looks different than the last. but whatever work becomes, the servicenow platform will make it just, flow. whether it's finding new ways to help you serve your customers, orchestrating a safe return to the office... wait. an office? what's an office? ...or solving a workplace challenge that's yet to come. wherever the new world of work takes your business, the world works with servicenow.
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all right, everybody. 90 minutes left in the trading day. we withiant to catch you up on e bonds, the stocks, commodities, one fell swoop stocks on a roll let's begin with bob at the stock exchange robert >> important thing is when we had the comments early in the morning from russian negotiators, they were taking steps, reportedly, to de-escalate the conflict that helped the futures, and we've been up ever since then. take a look at what's been moving here. the important thing is we're dealing with this whole question, and jim brought this up this morning, of peak n commodities. c conoco, chevron, showing signs of exhaustion. stocks in the material sectors down notably today the leadership board on the s&p
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500 hopes for more spending. the airlines are trading up, like united and american mastercard and all the credit card companies are trading up. the car companies, oil companies, gm and ford are all trading up again, hopes for more spending out there. the economy remaining strong have you looked at the new hilus? we don't have all the commodity names anymore. there's utilities on it, like first energy there's a couple industrials that haven't been there before, like union pacific and this law to reach like public storage just noting, we've had one great rally since march 8th in the got tgo -- bottom the two-year bond rising to the highest level in years yesterday, we saw the 5 and 30 year invert, in which the 5-year note yield was higher than the
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30-year t bond today, we closely watch the spread between the 2- and 10-year spreads. there you see it basically flat, folks. getting very close to inverting but not quite there yet. inversions generally seen as not positive indicators at all in fact, they're indicators but not guarantees of a recession. let's walk over here now follow me. come right along we finished the bond report, brought to you by pimco. now, we are gong to go to pipa for the commodities. >> tyler, it is a roller coaster ride for oil you can see the dramatic drop. let's pull up a chart here around 8:00 a.m. this morning, as we go indication that peace talks between russia and ukraine were progressing there you see it, around 8:00 a.m. wti dropped 9 bucks, trading as low as $98.44. but it has recovered some of those losses and is finishing
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the day here down 2% at $103.79. brent crude is $109.84 for a loss of 2 1/3% the lockdowns in china are also weighing on prices shanghai accounting for about 4% of chinese oil demand. commerce noting this is bringing some relief for a tight market energy is stocks are down once again. biggest losers inclaude chevron and diamondback. >> thank you. check out shares of apple, why not? it is practically in every mutual fund. higher again today this would be the 11th straight up-session for apple the last time it had a streak that long was 2003 when steve jobs was still running the company. apple is up 15% over this winning streak, adding about 400, kelly, billion dollars of market value. >> a huge run, absolutely worth
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noting. everybody, after the break, our exclusive interview with philly fed president patrick harker we'll get his views on the economy, rates, that yield curve, inflation, and so much more right when "power lun" rern don't go anywhere.
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welcome back to "power lunch. the big event we're watching, the potential inversion of the 2-year and 10-year yields. it is generally an indicator of recession. it's two basis points away from happening again. it is all happening as the fed is getting ready to fight inflation more aggressively. we have predictions for as many as seven rate hikes this year. some or many of which could be by half a point. can the fed engineer a soft landing, so to speak, or not patrick harker is president of the philadelphia fed, and he joins us to weigh in on all of this now, along with our very own sarah eisen. sarah? >> thank you very much welcome philadelphia fed president to new york, patrick harker good to see you, president harker.
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>> thank you. >> i listened to your speech earlier. you, like a lot of your colleagues, are worried about the inflation situation. >> yeah. >> are you in the camp for a 5 50-basis point hike next meeting in may >> not at this point but i wouldn't put it off the table. i was in for seven 25-basis increases. two things are happening one is raising the fed funds rate second is normalizing the balance sheet, which will also remove a combination. >> should that start in may? >> i would like it to start sooner rather than later. >> how aggressive would that look we don't hear much about the balance sheet shrinking. >> my view is we start on the process of reducing the size, then put it on auto pilot. not use that as a tool for monetary policy. it is hard to do policy with two things moving at the same time put the balance sheet, normalization on auto pilot, then we can adjust, if necessary, the fed rate going forward. >> the market doesn't like the balance sheet on auto pilot.
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wasn't that a communication error the last time that happened doesn't it depend on what happens with the economy and the markets? >> we can use the rate to adjust appropriately. in this case, we should communicate early and often what we're going to do. we're finalizing that plan then we execute it i don't think we should play around with it month to month. >> i'm strurprised you d you'ret there yet, on the 50-basis point hike next meeting. your colleagues are getting there, and there is a realization the fed is behind. >> i'm not taking it off the table. i'm quite open to the idea of a 50 basis point -- let's see what the next enflainflation readings the balance sheet matters, too. >> inversion of the yield is happening. how does that matter. >> it is correlated with recessions, but causation is not very clear so we need to make sure we're look at lots of different areas.
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we are starting this process of raising rates and removing the combination with a healthy economy, absent inflation numbers. look at the jobs numbers we're seeing, including those today. this is a strong position we're in i think we can't always use the history as the sole measure. is it a measure? absolutely but not the measure. >> i feel the concern is that the fed, you guys are going to overdo it when it comes to hiking interest rates to fight inflation and sink us into recession. >> that's why i'm still open to 25 versus 50 next month. i think we need to be careful about this, that we don't ruin a good economy otherwise, except for inflation. we'll see. >> when do you think inflation p peaks? >> yeah, so it depends on the supply chains. i would have said sometime this year or early this year, but with the china situation, the ukraine situation, so many other
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things are coming at us, it's a little hard to predict right now. >> are you still in the camp that says inflation will go down to 4% or so level by the end of the year we're, what, around 8% right now? a lot would have to go right. >> yeah. i'm north of 4%, somewhat north of 4%. again, a lot would have to go right. i'm really concerned about the shutdown in china and how that's going to affect supply chains. of course, this tragedy in ukraine. >> can the fed do something about that doesn't that mean you should tighten more >> see, this is where -- i mean, you nailed it. we are trying to balance off two things i think here, i am still for seven 25 basis points for this year we have one we've already done but if the data -- and it's not just the actual inflation number i look at. it is what i'm hearing from my contacts this is the beauty of the federal reserve system and the regional banks are these supply chains really continuing to be a problem are we seeing underlying
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inflation dynamics getting better or worse? that's what i'm looking for. >> then there is the growth outlook. so can the fed engineer this so-called soft landing fed chair powell said, yes, it's happened in history, but, actually, while it has, more times than not, the fed has taken us into a recession from hiking. >> yeah. what i'm looking for is a safe landing. it may be bumpy along the way. it was bumpy going up. it'll be bumpy coming down we've all been on those planes we land safely, but it could be a bit of a thrill ride i don't want that. that's why we're being cautious and careful about how we implement pomlicy. >> kelly evans in the studio has a question for you, president harker. >> thanks. had the parker, a simple question because you've said you're open to both half a point and quarter point hikes. you know, we're kind of looking at the economy both strong and weak but if you take inflationary expectations into account, the fed would need to hike 3.5 points just to get real rates to
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zero so are you not way behind the curve? why not hike a full point in the next couple of months? >> yeah, again, there's two things driving inflation one is demand and the other is supply we can affect the demand side. we don't affect the supply side. i think both these dynamics are happening simultaneously at this point, i would not be supportive of something like 100 basis point increase we need to see how this plays out. >> tyler >> president harker, the phrase that pays here is the one kelly used, and that is behind the curve. you hear it all the time i wonder if -- how you react when you hear that do you think the fed is or was behind the curve on inflation, and, if so, why? what cues were missed, if you even admit to that >> i think we all, as a collective we, the whole economics profession, we do the survey of professional forecasters out of philly, we
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all missed some signals. we thought the supply chain constraints were going to be eased sooner than they are we started to hear in the philly fed back in the fall that this was not going to be the case it was going to be more long-lived that started, in my view, the need to remove accommodations sooner rather than later. >> the market has taken all of this remarkably well we're going out with a gain of almost 5.6% for the s&p in the month of march does that signal you have the green light to be more aggressive on policy >> this assumes we're the only ones moving the market a lot of other factors in the world, including, again, in particular, the ukraine situation, and the potential peace or lack thereof that is also moving the market i take that with some grains of salt. >> how do you look at what that's done to global growth, the war in ukraine, the spillover effect on europe, and what that might ultimately mean for us here in the u.s.? >> yeah, i think it'll be long-term effects.
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as people reengineer the supply chains, i think this is not just a short-term phenomena coming out of russia. that's going to take some time it is going to affect some of the supply chains for a period it is hard to predict how long we also have the shutdowns happening in china, which are clearly going to have a short-term and immediate effect on supply chain, as they have before. >> do you talk about this? do you think about the global impact of your action? we're starting to see big divergences between us and japan. the yen has been tanking on this idea. >> right. >> emerging markets effect and everything the fed is doing, this huge pivot you've made, and what it'll do to the rest of the world. do you think about that? >> sure, with respect to the feedback back to the u.s. k economy. that's what we need to do. we have to understand the global economy, but in the sense of how it impacts the u.s. economy fundamentally. >> ultimately now, do you think we're insulated? >> none of us are. this is a global world we continue to be a global
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world. those markets are interrelated at this point, it is russia and the shutdowns in china that are top of mind for me. >> finally, on this question, and we've been talking about it the whole time, do you prioritize growth or fighting inflation? because a lot of people think it is ultimately going to come down to one or the other when it comes down to your policy and how it unfolds the rest of the year >> at this point, it is inflation. we need to get inflation under control. we need to make sure expectations don't become an anger. that's job one i don't want to overdo it, though, and try to stomp the brakes hard and have growth end. we need the growth, addss well,o the u.s. economy again, it'll be a safe landing, i hope. >> what does that mean, not recession? >> yeah. i think it'll be a bumpy ride. there may be bumps when we get into a period of below trend growth for a while, but i think we can pull this off because, again, we're starting at such a strong position going
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in >> let's hope so president harker, thank you very much for joining me here at the nyse good see you president of the philadelphia fed, patrick harker, coining the term safe landing. not a soft or hard landing, a t turbulent but safe landing. >> safe works. bring the plane down thanks very much, sarah. patrick harker, thank you, as well. up next, a working lunch with the ceo of a company disrupting the construction industry with software pull up a chair. join us at our table ple wti f y nt.
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construction costs are through the roof because of inflation. builders, contractors looking to control inflation. jon fortt brings us a ceo who grew up making things. i know you're going to tell us about his lego habit >> tooey courtemanche is founder and ceo of procore, a 20-year-old company, using software and the cloud to make construction management more efficient. his approach puts project planning, designing, building, and financial management in one suite. when he was in eighth grade, he started working in a cabinet shop that was also a general
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contractor and he's been putting things together ever since >> i build highly complex lego structures as a stress relief. so in fact, i'm building the titanic right now, which is one of the largest lego sets they have, like 4 1/2 feet long yeah, i'm still a builder also, and i'm remodeling a house i built a barn from the ground up i'm always building. >> having a couple boys who also like legos right now, i must ask, if you are married, where do you put these things? once they're finished, okay. right? >> my wife has no -- there is no place in our house for a lego set. especially the millennial falcon or the death star or whatever. you know so they all get shipped to regional procore offices and get
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put on shelves >> my boys make a lot of lego sets and we have nowhere to put them procore went public about eight months ago it has about an $8 billion market cap trying to address customers large and small. tooey told me he's trying to useidaty on customers cash flow to offer them credit to keep them productive. >> maybe you haven't thought about this, but when somebody showed up -- a plumber showed up to do your bathroom with a toilet that was going to be installed, that plumberbought that toilet and he's probably not going to be paid for 90 days so they have a massive cash flow problem. because they're spending their retirement on funding the projects they're working on, they're limited to the number of projects they can work on at any given time through the lien waiver management process or the mechanics lien process in construction, procore can help
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provide material financialing to the subcontractor so they don't have to dig into their life savings to pay for that toilet >> that helps the overall economic process and his growth. procore has 33% growth, an industry that is still used to using a lot of paper and a licensing model that might help him grow by letting all of the companies working on a project access the platform. an interesting challenge and opportunity. trying to digitize a largely analog work force where everybody doesn't carry a laptop around, but everybody these days does have a smartphone >> i'm surprised that forte knox doesn't have regional offices where you can put the lego items. this suite has design, like the architects' plans. it has what needs to be bought >> right even the bidding process before the buying >> the bidding process i thought what was very interesting issubcontractors
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>> they even have management of the labor, the workforce on site he was telling me about the ability to use cameras with facial recognition to know when people have showed up on site. at office buildings you can badge in, but that doesn't work on a work site it's all about efficiency. >> it's super cool an area that doesn't get this much attention from startups is tooey his real name >> his real name is craig, but he's craig jr., so his nickname was tooey. >> i'm trying to imagine what part of the world he's from. >> san diego bo born in portland >> does see say how the supply chain has made the work harder or made his work more important? >> it's raised those costs dramatically which is why their focus on efficiency is part of their play and argument right now. also, their offering of financing because there's a lot of demand for people to be able
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to do construction projects, but you don't want the problem to be not only the materials but also the subcontractors' ability to buy the toilet if he can take that off the table -- >> yeah, so he doesn't have to extend his cash to buy the lumber or whatever >> and he's got the data, knowing who is consistent in their work and who gets paid on time, so that helps it make a better risk. to give credit to someone. >> there's a lot of people who want to get those renovation projects done right now. this is such an interesting way you can improve that process and maybe unleash more opportunities. >> more and more you're seeing these software companies building platforms for specific industries start off big, facebook, google, but now you're seeing industry specific plays >> yeah, and i tell you, we worked with an architect on a potential project that we're looking at, but the way these design projects enable you to change things effortlessly is
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amazing. oh, i would like to door here or the shelf here you can see it instantly >> hopefully deflashzary >> hopefully john and i happen to live in the same town, but there are a lot of projects going on thanks a lot >> love it jon, thank you so much up next, back to the bond market we're going to check in on the yield curve and give you the latest after we heard from philly fed's patrick harker. we're back in a moment what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq
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welcome back, everybody. let's take a quick scan of markets. the nasdaq is still actually at session highs right now, up 246 points we did hear some commentary from the fed's patrick harker i don't believe he's technically a voting member. he may have a vote for technical reasons. anyway, he did seem open to more dovish stance, maybe 25 instead of 50 depending on what happens with supply chain and the economy. let's check in on the bond market where we're watching the spread between the two-year and ten-year yield curve which is close to inverting within a point, actually even got flat today to compare it, let's compare that with the ten-year, three-month yield curve. that one has been fairly steep and has steepened this year. 1.8 points, and has a similarly solid track record >> as you pointed out, through all of this, through all of this yield curve flattening and so forth, the stock market, the equity market, forget the bond market, but the stock market has been doing very, very well we had an 11-day streak for
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apple and others, i think three out of the last four week we ended higher in equities >> and people say, you often get a couple years before the recession or the stock downturn hits but again, look at some of the other indicators jobless claims, you know, there's a lot of demand out there still. >> we thank sara for joining us for a little bit of the show and now it's time for us to join her. >> thanks for watching "power lunch. "closing bell" starts now. >> thank you stocks are higher again, up 1% on the s&p and the two-year/ten-year spread is about to invert. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen we have a great show coming your way including an exclusive interview with starboard value ceo jeff smith in just a few moments. plus, we'll talk to the ceo of nikola in his first interview since announcing the start of production for nikola's electric trucks the stock is up 40% in the past month. but first, here's a look at where things stand in the market a 1% gain for the s&p 500. we're going st


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